Saving for retirement: start now

Story and slideshow by MARISSA BODILY

Learn about some tools for saving for retirement.

Aging adults are finding that it is very expensive to retire. The need to prepare for that time of life should start early if people want to be able to live comfortably after they stop working.

The average age to retire is 62 years old and the average amount of time a person spends being retired is 18 years. This means that one needs to be able to anticipate the preparation required to provide for themselves financially for 18 years if they don’t want to spend that time working, according to statistics collected by Statistic Brain from the U.S. Census Bureau, Saperston Companies and Bankrate.

“Start saving early,” said Jared Johnsen, a financial planner at BCJ Wealth Management in Salt Lake City. “Establish the habit of putting away a little each pay check. You’ll never miss it, but [your money] will quickly grow.”

The average retirement age is going up because people are having to work longer to prepare sufficient funds. It is their savings that they are going to live off of when they are no longer employed.

In the early 1990s, the average age to retire was 57 years old, according to a 2013 Gallup Economy survey. In the past, workers could rely on Social Security to take care of them financially. It was a much greater possibility for them to be able to sustain themselves with that money instead of having to prepare and save individually. Unfortunately, workers can no longer rely exclusively on Social Security to give them the life they want after they are retired.

Statistic Brain determined that a married couple over age 65 will pay $215,000 for medical treatment over 20 years. Out of 100 people who started working at age 25, only 4 percent will have an adequate amount of money saved for retirement by age 65 and 63 percent are dependent on Social Security, friends, relatives or charity.

“The average person is not prepared,” Johnsen said. “Ten thousand people turn 65 every day and over 50 percent of them have zero savings for retirement. The average retirement plan balance for all 65 year olds is only $33,000.”

Social Security has been the program that people have depended on to help them get through their retirement years. According to CNN Money’s Ultimate Guide to Retirement, the program is based on contributions that workers put in. While employed, the workers pay money to Social Security and reap the benefits when their turn to retire comes.

Social Security is no longer sustainable because instead of a group of people putting money in and only one person taking it out, the ratio is shifting to one-to-one. Essentially, for every person who puts money in, one person is taking money out.

“Don’t count on living off Social Security when you retire,” said Peter Hebertson, information and referral program manager for Salt Lake County Aging and Adult Services. “We don’t know what is going to happen with your generation.”

The best thing young people can do to prepare for retirement is obtain an education and save money, Hebertson said.

Because Social Security is no longer a guarantee, people are having to become more self-reliant when it comes to planning for retirement and the future.

Social Security is far from perfect, Johnsen said. It won’t be enough to meet all of our needs, it will just serve as a supplement.

Eighty percent of people age 30 to 54 believe they will not have enough money saved for retirement, according to Statistic Brain.

For those people who are getting closer to retirement and are not prepared, Johnsen said, “They should start now. They should also do some calculations to figure out how much money they need to put away to reach their goals. The older they are, the more they need to put away.”

Calculators are available online to estimate how much money you will need for retirement. They can take into account all your living expenses and other expected costs, including leisure.

There are many options available to help save money effectively. “I would first look at an employer-sponsored qualified retirement plan. Generally they offer match contributions that they put in on your behalf so it’s free money,” Johnsen said. He also suggests looking at a Roth IRA because the growth and distributions after you put your money in are tax free.

“Albert Einstein said his greatest discovery was compound interest. It can work for you or work against you. Start saving early and compound interest will be a great tool,” Johnsen said.

“I meet with numerous people every month,” he said. “I met with one individual that started [saving] when he was young and got in the habit of saving and even with his modest income he was still able to accumulate over $2 million for his retirement needs.”

This is an example of someone who was well prepared and made compound interest work in his favor. However, there are people who have not prepared as well.

“I met with a client who is a doctor that is 55 years old and makes over $500,000 a year in income,” Johnsen said. “But he also spends $500,000 a year on lavish travel, fancy cars, a huge home, etc. He asked me to help him save for retirement and was completely embarrassed to tell me that he has only accumulated $30,000 in an IRA. Yet he wants to live off of $250,000 a year when he retires. He wants to retire in 10 years. I told him he basically needs to save every penny over the next 10 years to reach his goal. Or he needs to retire on much less or wait longer to retire. The reality is that he needs to do all three.”

Saving for retirement is a reality that the young and old need to face and prepare for in order to have a comfortable and pleasurable future that continues beyond the working years.

 

Marriage equality for people with disabilities

Story and slideshow by ANGIE BRADSHAW

Learn more about marriage equality for people with disabilities.

According to the Cornucopia of Disability Information, approximately 43 million Americans, or almost one out of five people, have a disability, making it the largest minority group in the U.S.  They are also among some of the poorest individuals. According to The World Bank, about 20 percent of the world’s poorest people have some kind of disability.

Employment is another challenge faced by people with disabilities. According to the United States Department of Labor, the 2013 unemployment rate for people with disabilities is 13.1 percent compared to 6.8 percent for people without a disability.

This could be the reason why so many individuals rely on assistance such as Social Security to help sustain a healthy living.

Among the many decisions faced by people with disabilities, marriage can be one of the most difficult.

Only 50 percent of individuals with a severe disability end up getting married, according to the Americans with Disabilities report.

The Utah state government assists single people with disabilities to help cover costs and provide accommodations where needed. But, if those individuals decide to get married, they could lose all their state-funded benefits or they could be substantially decreased. This leaves them to decide between marriage or continuing to receive benefits.

According to the Social Security Administration, the 2012 rates and limits are:

  • SSI will change from individual rate to couple rate.
  • If two people who receive Social Security Income (SSI) get married, they automatically receive 25 percent less.
  • Income limits: You can’t make more than $698 per month individually or $1,048 for couples to qualify for SSI.
  • Asset limits: You can’t have more than $2,000 individually or $3,000 as a couple to qualify. All of the following are counted as assets: cash, checking account, savings account, stock/bonds, and motor vehicles (except for one). If you exceed these amounts you do not qualify for SSI.

The difference in the benefits amounts between married and unmarried individuals is termed the “marriage penalty” by the National Council on Disability. Furthermore, the SSI can deem a couple married even if they are not legally wed. According to an article in Apostrophe magazine and the Social Security Administration, “The Social Security policy states that a man and a woman who live in the same household are married for SSI purposes if they hold themselves out as husband and wife to their community.”

Disability Rights North Carolina reported, “SSI beneficiaries are deterred from marrying because it will cause a reduction in crucial benefits that are already hardly enough for basic food, shelter and disability related expenses.” The document further noted, “For example, a national housing study published in 2007 found that the national average rent for a studio efficient apartment was more than a full SSI monthly benefit.”

With the cost of living on the rise, the amount of SSI benefits becomes more and more inadequate.

Drew Hanson, a senior at the University of Utah, has dealt firsthand with this. Hanson was diagnosed at age 4 with hearing loss. His parents made the decision to get him hearing aids, which he extremely disliked at first. “I would take them off and throw them across the room,” Hanson said. He has since gotten used to them and continues to use his hearing aids on a daily basis and uses lip reading as a back up.

At 24 years old he met Becky, who later became his wife. They waited two full years before finally deciding to get married. They had to weigh the options of having his benefits decrease and get married or hold off. Ultimately, they decided to get married.

Luckily, his wife got a job with the state and they now have benefits through her work..

They now have a 2-year-old daughter named Takira, which means, “treasure” in Japanese.

In several online articles many people believe the marriage penalty is an “anti-family” law and that something should be done. Citizens are advocating the marriage penalty and getting petitions signed, including a Facebook page called “Marriage Equality for People with Disabilities.” Their mission statement says, “Fighting for the right for people with disabilities to be married in all 50 states without financial, medical and economic penalties.”

There is also a website called thepetitionsite.com whose goal is to get 10,000 signatures to remove the marriage penalty against people with disabilities. So far, the petition has only 846 signatures.

Carly Fahey, also a senior at the University of Utah, has cerebral palsy. She said many people with disabilities wait a very long time before getting married or decide not to do it all because of the negative impact it could have on their lives.

“I’m confident that marriage will be wonderful,” Fahey said, “but figuring out the legal details will be an obstacle for sure. Something needs to be done.”

Randal Serr, director of Take Care Utah said in a phone interview that many people with disabilities are having difficulties with health insurance coverage and knowing where to start.

TCU provides assistance to those who are uninsurable because of their disability and pre-existing conditions. Employees work with individuals as well as 13 organizations in the Salt Lake Valley to navigate the health insurance process.

Serr said many health insurance companies are reluctant to insure individuals with disabilities because the state provides coverage through Medicaid and Medicare. Furthermore, he explained that under those programs there are many stipulations making it difficult to qualify and stay qualified.

For instance, the Social Security office decides who is considered disabled. People are asked a series of questions such as: are you working, is your condition severe and is your condition listed as a disabling one. From there, staff decide whether individuals fall under the disabled category.

“With Obamacare I think it will drastically change and be a positive direction for people with disabilities, on the application they don’t ask about pre-existing conditions,” Serr said. “In fact the only health-related question they ask, is if they use tobacco.”

As for marriage the fight continues in creating equality. Blogger Ashley Lasanta wrote, “To love and be loved in return is inherent to all human beings. To overlook or deny the rights of the disability community in their capacity to love and be loved undermines our ability to truly fulfill our commitment to better the lives of others.”

Will Social Security disappear?

Story and photo by Alexis Young

Social Security may be in jeopardy after the baby boomers, bigger than any generation before them, retire. There are about 78 million baby boomers in the U.S. The oldest will turn 62 next year, which is the age they qualify for Social Security benefits.

Rob Ence, the Utah state director of American Association of Retired Persons and an upcoming baby boomer himself reaching retirement age.

Social Security will be put to the test. Rob Ence, the state director of American Association of Retired Persons (AARP) in Utah, said without changes, Social Security faces a long-term economic shortfall.

“Payments of Social Security will rapidly exceed the baby boomer surplus. The system will only be able to pay out 70 percent of projected benefits after the year 2037, not the 100 percent current benefits,” Ence said.

According to the AARP Web site, Social Security is a public welfare program that started in January 1937. It is funded by taxes and administered by the federal government. Benefits are based on your year of birth, 35 of your highest years of earnings, and the age at which your benefits begin.

“It is not a retirement plan, and was never intended to meet all the needs in retirement, but rather a floor to protect against poverty in longevity,” Ence said. Social Security has always been designed to give a minimum level of support, and was designed to provide for sustenance needs.

Many baby boomers did not plan for retirement. “Consumption and debt accumulation have been the trend, and the self-indulgence will force dramatic reduction in lifestyle during retirement,” Ence said. “Because baby boomers haven’t saved, it is going to be quite difficult for them to rely exclusively on Social Security income. Those that do will have hardships in the cost of living expenses.”

Ence, an upcoming baby boomer himself reaching retirement age, is one of the few who is properly saving for retirement. “I am now 57, I have an excellent defined benefit plan with my employer, and I set aside 11 percent of my income monthly in a 401(k),” Ence said. “If my health is good, I plan to work full time until age 68-70.” Not having to depend entirely on Social Security, and planning on a sufficient monthly income after he retires, Ence intends to travel and participate in extensive service throughout Utah and perhaps abroad.

According to AARP’s November 2009 Social Security report, 49.9 million people throughout the country receive Social Security benefits (about 16 percent of the population). The Social Security Administration estimates 91 percent of Americans age 65 or older receive benefits. Among these people, Social Security is the major source of income for two-thirds and virtually the only source of income for the other one-third.

Rising unemployment, declining savings and an upcoming wave of baby boomers reaching retirement age has increased the number of people applying for Social Security benefits, which are available as early as age 62.

“It is unwise for a person to file for Social Security before age 66. People should work as long as they want to and are able,” Laura Polacheck, an attorney with AARP, said. Older adults, who take Social Security benefits before age 67, the established retirement age, get a reduced monthly amount. Polacheck said people need to think earnestly about the outcomes of taking early retirement benefits and consider their options.

Heather Spencer, an associate economics instructor for the University of Utah, points out taking a reduced benefit now may weaken one’s expectations of life later on. “Most Americans view Social Security as a retirement plan, and feel entitled to benefits when they are 65 or older,” Spencer said. “Be realistic, you want to plan on having the same standard of living both pre- and post-retirement.”

For an individual born after 1943, every year you delay the acceptance of benefits after your normal retirement age, you get a delayed retirement credit of 8 percent up to age 70, according to the Social Security Web site.

Spencer offered a list of suggestions that the government needs to do to keep Social Security viable for future generations:

• Make yearly adjustments that keep up with inflation.
• Change the cost of living from the average wage to the consumer price index.
• Increase the retirement age to 69.
• Raise the amount of income subject to Social Security taxes.
• Reduce benefits.
• Invest the trust fund money in reliable products.
• Make Social Security “means” tested, which suggest if a person does not need the extra income, they would not collect the benefits.
• Advance retirement assistance that meets the needs of American workers.

“Those things alone will more than account for any projected shortfalls, and will keep Social Security solvent for the unknown future,” Spencer said.

When asked if Social Security is going away or going to continue, Ence said he did not think it will go away, nor would he want it to. “It is the most successful social program ever created in our country, and a model for success internationally,” he said. “We need to recognize that Social Security needs to be modified to be sustainable, and not a burden for future generations.”